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Nearly $8 Billion Will Be Bet On The Super Bowl
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Bloomberg released an article yesterday talking about Super Bowl LVI, and the opening paragraph read, “The first Super Bowl of the online betting era is upon us, and it’s going to be wild.”
It’s short & sweet, but I feel like it does an appropriate job describing exactly how most people in and around the online sports betting space feel this week.
Of course, mobile sports betting was illegal throughout the United States only a few years ago. Still, with the United States Supreme Court paving the way for individual states to introduce legislation permitting legal sports betting in 2018, the industry has started to accelerate much faster than most people initially thought.
With sports betting legalized in over two dozen states, plus Washington, D.C., there are now more than 100 million Americans that can legally place bets at home.
Americans With Access to Legal Gambling In Home State
Super Bowl LIV: 19 million
Super Bowl LV: 55 million
Super Bowl LVI: 100 million-plus
More than 80 million Americans have gained access to legal sports betting over the last two years, and roughly 1/3 of the country can legally wager in their home state.
Here is some interesting data the American Gaming Association released this week.
Over 30 million American adults plan to bet a combined $7.61 billion on Super Bowl LVI, that’s up 35% from the previous year and includes nearly 20% of all Super Bowl viewers.
Over 18 million American adults will place traditional sports bets at a retail sportsbook or with a bookie, up 78% from 2021, but another 18 million will also casually bt with friends as part of a pool or squares contest, up 23% from 2021.
And when you step outside of just the Super Bowl, the numbers are also growing.
Over 12 million people plan to place a bet online this year, up 70% from 2021.
Nearly 5 million people plan to place a bet in person at a sportsbook, up 231% from 2021.
Notably, the legalization and growth of online sports betting operators have drastically reduced the number of people wagering through offshore books.
The percentage of bettors that say it’s important to use a legal operator has increased to 76%, up from just 65% a year ago and less than 50% a few years prior.
“The results are clear: Americans have never been more interested in legal sports wagering. The growth of legal options across the country not only protects fans and the integrity of games and bets, but also puts illegal operators on notice that their time is limited.” – Bill Miller, AGA President and CEO
But I think we all realize that fans aren’t the only ones benefitting here.
Companies like FanDuel and DraftKings are spending billions of dollars on marketing their product to potential customers each year, enabling them to snatch up market share as new states go live and build a dominant position on the overall market.
As a result, both FanDuel and DraftKings have seen their enterprise value skyrocket.
FanDuel Enterprise Value
2015: $1 billion
2022: ~$30 billion-plus
DraftKings Enterprise Value
2015: $1 billion
2022: $20 billion
And the National Football League, among others, has seen tremendous value also.
The NFL spent hundreds of millions of dollars fighting the legalization of sports betting for decades, but after the Supreme Court ruled PASPA unconstitutional in 2018, they have gone all-in — they even have a team in Las Vegas now!
The league has also signed deals with most of the major sports betting companies and expects those agreements to generate over $1 billion in annual revenue by 2030.
But that doesn’t even include their deal with Genius Sports.
Sports Business Journal reported earlier this year that the NFL signed a six-year distribution deal with Genius Sports worth roughly $120 million annually, half of which is to be paid in Genius equity.
The London-based data provider has a unique role that the average fan probably doesn’t think much about. They sit between the NFL and the multi-billion-dollar sportsbooks that allow you to place bets, conducting the critical role of data aggregation and odds calculation, as well as ensuring everything runs smoothly.
Here’s how Bloomberg described their role:
Genius’s job is to transmit livestreams and statistics from games to sportsbooks around the world—the NFL-authorized record of every penalty and dropped pass.
It’s also to innovate, giving the house ever more imaginative options to keep gamblers around the world on their phones during games. In-game wagers are an increasingly lucrative part of the market, accounting for most of the revenue at many sportsbooks.
One popular variety is the proposition bet, or prop bet—a wager on a single event that may not directly affect the game’s outcome. Want to bet that Rams receiver Cooper Kupp will collect at least nine catches? How about picking the fastest player on the field?
Genius is often the wizard behind the curtain, collecting the data, calculating the odds, and updating them in real time for customers such as DraftKings and FanDuel, which then blast them out to customers’ phones.
My point is that while everyone continues to talk about how big sports betting can eventually become, we are kind of already there — this is a massive business today, and it will be much, much more significant in the future.
But when I zoom out and start to look at the macro impact that this market shift might have on society overall, the cynic in me gets a little concerned about the future.
It feels weird that while the United States is aggressively expanding on everything sports betting-related, counties across Europe are aggressively attempting to minimize the societal issues that gambling problems have caused.
They have a much more detailed history with the various cycles related to sports gambling, including introduction, adoption, market growth, addiction, and now, contraction, so one might assume that we would rely on them for guidance.
As Mark Twain said, “history doesn’t repeat itself, but it often rhymes.”
Now don’t get me wrong, in most cases at least, I generally believe that people should be presented with all options, good or bad, and be able to decide for themselves.
Why should the government be allowed to push cigarettes, sugar-based foods, and the lottery but not allow people to bet their legally-obtained money on a sports game?
I just think we probably need to be a little bit more careful than we currently are.
Have a great day. I’ll talk to everyone tomorrow.
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